Gannett Gives Dish an Ultimatum: The Clock is Ticking

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Dish Network’s (NASDAQ:DISH) Hopper DVR is widely hated among content providers. The DVR features “Auto Hop” technology that allows users to skip through commercials on recorded shows with a single button. Understandably, CBS (NYSE:CBS), NBC Universal (NASDAQ:CMCSA), and Fox (NASDAQ:NWS) have responded with copyright-infringement lawsuits, while Dish has sued them right back.

Most recently, Gannett (NYSE:GCI) has threatened to withdraw its content from Dish Network if it does not block the Auto Hop feature. Content providers make their money from advertisers, which subsidize shows and programs in order to get their commercials in front of viewers. Auto Hop destroys this traditional ad structure. If Hopper effectively removes advertisements from content, then Dish is committing what amounts to theft.

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“If Dish refuses to reach a deal before midnight, October 7, Dish subscribers could lose their local Gannett station and access to some of the year’s best programming,” said the company in an emailed statement. Those subscribers would lose some ABC, CBS, and NBC affiliates.

“Gannett’s demands translate into more than a 300 percent rate increase, which would likely result in higher monthly fees for customers,” responded Dish in a statement. In a September interview with USA Today — owned by Gannett — Dish vice president Vivek Khemka was asked, “What do you say to the networks who think you’re evil?”

His reply, “Consumers have been forwarding through commercials since the beginning of the DVR. This just simplifies the process. The feedback from consumers is that they love it.” He added, “We are not holding back the Hopper. We’re promoting and selling the Hopper today.”

The Dish Hopper is at the heart of an industry-wide debate surrounding the future of television advertising. The entire ecosystem revolves around the traditional commercial structure, but the technology and culture are rapidly moving away from it. All eyes to premium cable networks?

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